Here is everything you need to know about TAX Deductions in Jamaica Written by Shekinah Ade-Gold on behalf of Budget Leaf
The National Insurance Scheme (N.I.S.) Tax
The National Insurance Scheme is a compulsory payment plan that was put in place to offer some financial relief to all employed persons. A contribution of 3% is taken from an employee’s salary, and this is matched by a 3% contribution from the employer on maximum JMD $1.5 million earned per year. Those who are self-employed would pay 6%, while voluntary contributors would pay approximately JMD $100 a week. The benefits gained from this include payment plans that cover children of deceased parents, accidents during employment that resulted in injury or death, widows/widowers if their spouse was a contributor, pension grants and funeral grants.
The Education Tax
This tax is charged at 3.5% for employers and 2.25% for employees after the N.I.S. contribution has been taken. These payments are non-refundable, and are used to improve the educational development and infrastructure that the country has set in place. In other words, this tax is what we use to make education more accessible for the country’s students.
The National Housing Trust (N.H.T.) Tax
Contributions for the N.H.T. are made at 3% for employers and 2% for employees. Self- employed persons also pay at a rate of 2% of their earnings. This tax goes towards securing land/housing for the contributor, and is allowed to grow overtime, leading to loans and other property benefits that can be used in the future. Employees are able to claim their contributions after 7 years, but employers are not able to do so. However, employer’s contributions are tax deductible/compulsory, while those of employees are not.
General and Special Consumption Tax
These taxes are placed on goods and services that are bought and paid for in the country. GCT is marked at 15% for most products and services, and is a common part of paying for anything anywhere in the country – whether you’re buying a book, or paying for dinner at a restaurant. Special taxes, on the other hand, only apply to certain goods such as alcoholic drinks, motor vehicles, petroleum products, etc. These taxes help to deal with managing waste, repairing roads and streetlights, etc.
Other taxes that are paid include those such as the Human Employment and Resource Training (HEART) contributions, which are paid by employers only at 3% of the wage bill; property taxes that can range from 0.50% - 0.90% per scale of rate on owned property; or even transfer taxes, which are 2% of the considered payment when transferring land, buildings, securities and shares. It is best to speak with a financial advisor in order to have the information most accurate to your financial situation.
As an earning Jamaican, it is important to know about the taxes you are required to pay in order to benefit later on in your life as a citizen. Education taxes will help your children; N.H.T. taxes can help you to buy your first home; N.I.S. taxes can help your family to take care of you in your old age, and GCT and property taxes go towards the upkeep of the nation’s utilities. Learning about how your taxes are used can give you greater motivation and discipline when it comes to managing your money.